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Author Topic: Witholding taxes on Income with Fotolia  (Read 6099 times)

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donding

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« on: February 07, 2010, 09:38 »
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I was just noticing that Fotolia is withholding taxes at 28% on my income. Now income taxes should only be withheld when the check is issued. Now if they are withholding taxes now....and you can't cash out unless you have earned the fifty and in the US you have to pay the withholding taxes to the IRS every quarter. I know this from being in business as a corp. several years ago. So if we can't cash out and they are paying this taxes to the IRS...that could be a problem. How are they going to issue W-2's at the end of the year on income you never received if they have been paying this tax to the IRS but not paying us. Does that make sense. In other words they should not be claiming they are withholding taxes untill we actually receive the money.

Any thoughts on this?


« Reply #1 on: February 07, 2010, 09:46 »
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I think you need to clarify this with them. If they are just keeping a running total and not paying anything to anyone until you close out the transaction by making a claim then it wouldn't be a problem for you, would it?

If they are deducting the money and paying it to the IRS before the payout falls due then it might be a problem for you.

Some agencies I use don't calculate it until payout (e.g. SS) others issue monthly statements showing what is earmarked as tax which is effectively the same as Fotolia is doing on a sale-by-sale basis.

donding

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« Reply #2 on: February 07, 2010, 09:57 »
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I'm going to try to check with an IRS employer guide line of withholding taxes to see if their 28% is the correct amount. If they are withholding taxes there is suppose to be a form filled out by the employee that shows rather they are married and how many exemptions they want withheld. Also if your salary is less than a certain amount there should be no Federal withholding taxes withheld depending on the exemptions and rather you are married filing jointly or separate or married filing separate, ect. ect. . They would still be required to withhold medicare and social security. I believe it is required for the employer to get one of these forms before withholding. The W-9 is for a tax ID number, not the form that is required to determine withholding taxes. I can't remember the name of the form right off the top of my head but I'm going to find out.

donding

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« Reply #3 on: February 07, 2010, 10:24 »
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Ok here's the deal. All employee's subject to withholding tax must fill out a form W-4. This form is to show withholding allowances. Employers are suppose to have copies of these. Now as for social security and medicaid...THIS IS FROM 2007 Circular E Employers Tax Guide, not 2010, but I doubt anything has changed. As an employer they are to withhold 6.2% social security and 1.45% medicaid tax from their employee's check. They are to pay the same percentage as the above, which is 12.4% social security and 2.9% medicare, which is a total of 15.3% which only half of that amount can be withheld from the employees check which would equal 7.65% holding from their check. Now I am going to contact support to find out where they are coming up with the extra 20.35% without having that W-4 form, which thay are suppose to have on file in case of an audit from the IRS.

lisafx

« Reply #4 on: February 07, 2010, 10:37 »
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Donna, if you are in the US, the easiest thing to do is provide your tax ID to them and then they won't withhold any taxes. 

donding

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« Reply #5 on: February 07, 2010, 10:57 »
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Donna, if you are in the US, the easiest thing to do is provide your tax ID to them and then they won't withhold any taxes. 
I know but I didn't do it and the withholding tax they would withhold would only be a few cents, which isn't a big deal to me, but those who aren't even aware what they are doing would be effected. I am going to fill it out, but I plan on dropping them anyway and won't get the money so it really doesn't matter to me. Do you know of anyone that they are withholding taxes from that has gotten a payout from them since the first of the year. How do they show what was withheld and how much of it was Federal, social security and medicare. Last year they didn't withhold taxes but sent me a 1099. Did they not do this last year? I guess what is bothering me is the principle behind it and rather they are doing it legally. The way they are doing business it really makes me wonder if they are doing it legally. Oh and I am a US citizen. I wish I knew someone who worked for the IRS to find out, if for nothing else than to find out if they are doing it legally or not.

« Reply #6 on: February 07, 2010, 18:10 »
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As a non-USA resident and living in a country with no treaty, I'm being cut in 30% of USA sales.  If the 29% 28% is not correct, can the 30% be wrong too?  I find it a very high tax given that I don't benefit from any cent of it.
« Last Edit: February 07, 2010, 18:24 by madelaide »

« Reply #7 on: February 07, 2010, 18:21 »
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As a non-USA resident and living in a country with no treaty, I'm being cut in 30% of USA sales.  If the 29% is not correct, can the 30% be wrong too?  I find it a very high tax given that I don't benefit from any cent of it.

Me too!

donding

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« Reply #8 on: February 07, 2010, 23:04 »
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As a non-USA resident and living in a country with no treaty, I'm being cut in 30% of USA sales.  If the 29% is not correct, can the 30% be wrong too?  I find it a very high tax given that I don't benefit from any cent of it.

Me too!

Do either of you have to file a US tax return? That's what I don't quite get about all this. I am a US citizan and therefore subject to withholding, but if they are withholding taxes...especially if they are withholding Social Security and Medicaid from your earnings, because if I'm not mistaken those two items can only be drawn if you have a SS# and are a US citizen. Have either of you gotten any payouts from them for the new year and if you have, does it show what the taxes are for...such as percentage of Fed tax, SS or Medicaid? I don't understand the 30% tax.

« Reply #9 on: February 08, 2010, 16:26 »
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Only this year they started to reduce 30% of sales in the USA.  As Brazil and USA don't have a tax treaty, I can not ask not to be taxed.  I'm ok with that, except that 30% is a lot, IMHO, given the small sums involved.  It's not that I am making thousands of dollars in the USA, you know.

« Reply #10 on: February 09, 2010, 03:45 »
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, does it show what the taxes are for...such as percentage of Fed tax, SS or Medicaid? I don't understand the 30% tax.

It's very simple - it's just a way of the American government helping itself to foreigners money for no reason. We get charged 30% of sales to the US and get nothing at all in return. They write a law saying that they can take our money, and its called "one of the costs of doing business". If it was a private individual doing it, it would be called theft.


« Reply #11 on: February 09, 2010, 06:00 »
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Also in my country we have tax refund if income is less of some amount...
I am sure that USA have something similar, so certainly we will see changing of this in the future...

« Reply #12 on: February 09, 2010, 07:29 »
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Also in my country we have tax refund if income is less of some amount...
I am sure that USA have something similar, so certainly we will see changing of this in the future...

No, there is no tax refund for foreigners unless you are in a country with a double-taxation agreement with the US.

« Reply #13 on: February 09, 2010, 07:35 »
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What about Canadians??? I pay my taxes on my US income here in Canada. Now I get double taxed?

« Reply #14 on: February 09, 2010, 07:48 »
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What about Canadians??? I pay my taxes on my US income here in Canada. Now I get double taxed?

Canada is likely the first place to have a treaty with the US to avoid that happening but I don't know. You probably need to go through the process of filling out the forms to get an exemption.

« Reply #15 on: February 09, 2010, 08:45 »
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taxation is usually done when you reach a certain threshold say $30,000 a year. So I don't understand why they can just tax us like that. Sigh

« Reply #16 on: February 09, 2010, 09:26 »
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taxation is usually done when you reach a certain threshold say $30,000 a year. So I don't understand why they can just tax us like that. Sigh

Because they make the law and we are worthless foreigners who have strayed within their grasp. I can't imagine a great uprising of American voters demanding that they don't get the benefit of taking our money, because there must be no taxation without representation. It's a ridiculous idea ;)


« Reply #17 on: February 09, 2010, 17:13 »
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I am not questioning the right to tax us high or not, I was only wondering if the 30% is correct, given that there was a doubt about the 28% a colleague was being charged. 

I think it's wrong to tax a small income so heavily, but unfortunately it's the country's prerogative.


 

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